Engineering Economy,9780130281289

Engineering Economy

by ;
Edition: 9th
ISBN13: 9780130281289
ISBN10: 013028128X
Format: Paperback
Pub. Date: 2000-05-30
Publisher(s): Pearson
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Summary

This book emphasizes the concepts and techniques of analysis that prove useful in evaluating the economic feasibility of engineering systems, projects, and services for decision purposes. It also familiarizes the engineer with operations and operational feasibility necessary to considerations of the design process.Chapter topics cover economic and cost concepts; interest formula; calculations of economic equivalence; equivalence involving inflation; bases for comparison and decision-making among alternatives; evaluating production operations and replacement alternatives; accounting; income taxes in economic analysis; decisions under risk and uncertainty and involving multiple criteria; and estimating economic elements.For a basic understanding of mathematical modeling in complex operational systems, essential to a growing number of engineers today.

Table of Contents

Preface xiii
PART I INTRODUCTION TO ENGINEERING ECONOMY 1(34)
Engineering and Engineering Economy
Engineering and Science
2(1)
The Bi-Environmental Nature of Engineering
3(2)
Physical and Economic Efficiency
5(1)
The Engineering Process
6(4)
Engineering for Economic Competitiveness
10(1)
Engineering Economy and the Engineer
11(4)
Key Points
13(1)
Questions
13(2)
Some Economic and Cost Concepts
Concepts of Value and Utility
15(1)
Consumer and Producer Goods
16(2)
Economic Aspects of Exchange
18(3)
Classifications of Cost
21(4)
Life-Cycle Cost
25(3)
Interest and Interest Rate
28(2)
The Time Value of Money
30(1)
The Earning Power of Money
31(1)
The Purchasing Power of Money
32(3)
Key Points
33(1)
Questions
33(2)
PART II INTEREST FORMULAS AND EQUIVALENCE 35(116)
Interest Formulas
Simple and Compound Interest
36(2)
Describing Cash Flows Over Time
38(2)
Interest Formulas (Discrete Compounding, Discrete Payments)
40(13)
Interest-Formula Relationships
53(2)
Compounding Frequency Considerations
55(4)
Interest Formulas (Continuous Compounding, Discrete Payments)
59(4)
Summary of Interest Formulas
63(9)
Problems
65(7)
Calculations of Economic Equivalence
The Meaning of Equivalence
72(2)
Equivalence Calculations Involving a Single Factor
74(7)
Equivalence Calculations Involving Cash Flows
81(4)
Principles of Equivalence
85(4)
Equivalence Calculations with More Frequent Compounding
89(4)
Equivalence Calculations Involving Bonds
93(4)
Equivalence Calculations Involving Loans
97(4)
Equivalence Calculations Involving Working Capital
101(14)
Key Points
102(1)
Problems
103(12)
Equivalence Involving Inflation
Measures of Inflation and Deflation
115(2)
The Inflation Rate
117(6)
Considering the Effects of Inflation
123(5)
Analyzing Inflation in Investments
128(23)
Key Points
139(1)
Problems
140(11)
PART III ECONOMIC ANALYSIS OF ALTERNATIVES 151(236)
Bases for Comparison of Alternatives
Present Worth
152(2)
Annual Equivalent
154(2)
Future Worth
156(1)
Internal Rate of Return
157(9)
Payback Period
166(4)
Capitalized Equivalent Amount
170(1)
Capital Recovery with Return
171(2)
Project Balance
173(17)
Key Points
179(1)
Problems
180(10)
Decision Making Among Alternatives
Types of Investment Proposals
190(2)
Forming Mutually Exclusive Alternatives
192(5)
Elements of Decision Criteria
197(5)
Present Worth on Incremental Investment
202(3)
IRR on Incremental Investment
205(4)
Comparisons Based on Total Investment
209(6)
Comparing Alternatives with Unequal Lives
215(29)
Key Points
225(1)
Problems
225(19)
Evaluating Production Operations
Characteristics of Production Operations
244(4)
Break-Even Analysis
248(13)
Operation and Production Decisions
261(10)
Economic Operation of Equipment
271(5)
Models for Procurement Operations
276(21)
Key Points
283(1)
Problems
284(13)
Evaluating Replacement Alternatives
The General Nature of Replacement Analysis
297(2)
Describing Replacement Alternatives
299(5)
Replacement Analysis for Unequal Lives
304(3)
The Economic Life of an Asset
307(4)
Replacement Assumptions and Decisions
311(12)
Retirement or Abandonment Decisions
323(1)
Examples of Replacement Problems
324(24)
Key Points
330(1)
Problems
331(17)
Evaluating Public Activities
General Welfare Aim of Government
348(2)
The Nature of Public Activities
350(2)
Financing Public Activities
352(3)
Public Activities and Engineering Economy
355(1)
Benefit-Cost Analysis
355(12)
Identifying Benefits, Disbenefits, and Costs
367(3)
Cost-Effectiveness Analysis
370(17)
Key Points
374(1)
Questions and Problems
374(13)
PART IV ACCOUNTING, DEPRECIATION, AND INCOME TAXES 387(80)
Accounting and Depreciation Accounting
General Accounting
388(3)
Cost Accounting
391(6)
Depreciation
397(2)
Accounting for the Depreciation of Capital Assets
399(2)
Basic Depreciation Methods
401(5)
Modified Accelerated Cost Recovery System (MACRS)
406(5)
Units-of-Production Depreciation
411(1)
Depletion
412(8)
Key Points
414(1)
Questions and Problems
414(6)
Income Taxes in Economic Analysis
Relation of Income Taxes to Profit
420(1)
Federal Income Tax for Corporations
421(4)
Effective Income-Tax Rates
425(1)
Interest and Income Taxes
426(2)
Depreciation and Income Taxes
428(5)
Gain or Loss on Disposition of Depreciable Assets
433(1)
Tax Credits
434(1)
Depletion and Income Taxes
434(2)
Calculating After-Tax Cash Flows
436(4)
Evaluation of Financing Methods Using After-Tax Cash Flows
440(7)
Capital Gains in After-Tax Cash Flows
447(2)
Inflation and its Effects on After-Tax Flows
449(1)
After-Tax Analysis of Replacements
450(17)
Key Points
455(1)
Problems
456(11)
PART V ESTIMATES, RISK, AND UNCERTAINTY 467(152)
Estimating Economic Elements
The Elements to Be Estimated
468(4)
Cost Estimating Methods
472(3)
Adjustment of Cost Data
475(8)
Cost-Estimating Relationships
483(7)
Estimating and Allocating Indirect Costs
490(6)
Accounting Data in Estimating
496(2)
Judgment in Estimating
498(4)
Key Points
499(1)
Questions and Problems
500(2)
Estimates and Decision Making
An Example Decision Based upon Estimates
502(2)
Allowances for Uncertainty in Estimates
504(2)
Considering a Range of Estimates
506(2)
Sensitivity Analysis
508(13)
Key Points
518(1)
Questions and Problems
518(3)
Decisions Under Risk and Uncertainty
Criteria for Decisions Under Risk
521(4)
Expected-Value Decision Making
525(3)
Expectation Variance Decision Making
528(5)
Monte Carlo Analysis
533(3)
Decision Trees in Decision Making
536(10)
Decisions Under Uncertainty
546(19)
Key Points
552(1)
Problems
552(13)
Decisions Involving Multiple Criteria
Multiple Criteria Considerations
565(2)
Direct Ranking Methods
567(2)
Systematic Elimination Methods
569(3)
Weighting Methods of Evaluation
572(2)
Decision Evaluation Display
574(2)
Decision Evaluation Display Examples
576(4)
Summary: Making the Decision
580(7)
Key Points
582(1)
Questions and Problems
583(4)
Appendices
Appendix A Interest Factors for Discrete Compounding
587(30)
Appendix B Effective Interest Rates Corresponding to Nominal Rate r
617(2)
Selected References 619(4)
Index 623

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